Treasury takes aim at Chinese opioid exporters

Making good on its promise to crack down on suppliers of deadly opioids, the Trump administration on Aug. 21 took steps to designate three Chinese drug manufacturing businessmen and their companies as violators of the Foreign Narcotics Kingpin Designation Act.

The Treasury Department’s Office of Foreign Assets Control (OFAC) identified Chinese nationals Fujing Zheng, Guanghau Zheng and Xiaobing Yan as prominent foreign narcotics traffickers. Their entities, Zheng Drug Trafficking Organization (DTO) and Qinsheng Pharmaceutical Co. Ltd., also were identified by OFAC as violators of the Kingpin Act.

“These Chinese kingpins that OFAC has designated [Aug. 21] run an international drug trafficking operation that manufactures and sells lethal narcotics, directly contributing to the crisis of opioid addiction, overdoses and death in the United States,” said Sigal Mandelker, Treasury’s undersecretary for terrorism and financial intelligence, in a statement.

The department said the Zheng Drug Trafficking Organization “touted its ability to create custom-ordered drugs and avoid detection from customs and law enforcement officials when shipping the drugs through express mail and the U.S. Postal Service.”

Another Treasury Department agency, the Financial Crimes Enforcement Network (FinCEN), issued an advisory to financial institutions to help them identify financial schemes related to the trafficking of fentanyl and other opioids and report them to authorities.

“The Bank Secrecy Act data that FinCEN collects, analyzes and disseminates provides tremendous insights into the illicit financial networks and individuals fueling America’s deadly opioid crisis,” said FinCEN Director Kenneth Blanco.
“Financial institutions must be on alert to red flags and other indicators of the complex schemes fentanyl traffickers are employing,” he added.

The Zheng DTO laundered money from its drug sales using digital currency such as bitcoin and placed in bank accounts in China and Hong Kong.

Advisories also were prepared for manufacturers of precursor chemicals for pharmaceuticals, online sales and marketing websites and third-party logistics firms to maintain compliance with the Kingpin Act.

U.S. persons or organizations that violate the Kingpin Act risk civil penalties of up to $1.5 million per violation and criminal penalties of up to 30 years in jail for corporate officers and fines up to $5 million. Criminal fines for companies may reach $10 million.

Since June 2000, more than 2,200 individuals and entities have been identified as violators of the Kingpin Act.